City of Vancouver proposes flipping tax as well as higher transfer taxes on luxury home sales
Council is proposing new measures to “stabilize land values” and “level the playing field” by increasing taxation on property speculators and those who sell high-priced homes, the City of Vancouver announced November 27.
As part of the Housing Vancouver strategy, council officials are recommending a series of measures “designed to curb ongoing speculation of land value and to remove barriers for developing affordable rental and social housing.”
The proposals include:
• Implementing a requirement that developments contribute toward affordable housing and public amenities in the area. The City said, “These rates will be set prior to the launch of new community planning programs, such as station areas, to help mitigate speculative behaviour and reduce the overall cost of new housing.”
• Implementing a speculation or flipping tax.
• Increasing provincial Property Transfer Tax on “luxury” properties.
• Reviewing and reforming federal and provincial tax regulations, encompassing income taxes and capital gains taxes, and closing loopholes.
Details of the proposed home-value thresholds for taxation and specifics on federal and provincial tax reform proposals are not yet available. The City said the full proposal document would be tabled before council in early 2018.
“Our Housing Vancouver strategy focuses on ensuring housing is for homes first, not just treated as a commodity,” said Vancouver Mayor Gregor Robertson. “We need to level the playing field to make housing more affordable for residents in Vancouver – supply alone is not going to solve our challenges. It’s time to create new tools that help the city to curb the negative impacts of real estate speculation and get more affordable housing built throughout the city.”
Gil Kelley, the City’s general manager of planning, added, “The effects of speculation have caused significant consequences for housing in Vancouver, and has hindered many of our attempts to build affordable rental housing as the high cost of land make projects unviable. We want people to stay, live, and build a future in Vancouver. Our new Housing Vancouver strategy ensures that future housing developments across the city will provide the right homes for our residents, not investors.”
The City also said it would work to create more secured rental housing, including “exploring the use of Rental Only Zones, to help keep housing available for people and families that live and work in Vancouver.” The City added, “The ability to do this will depend on legislation from the provincial government.”
Anne McMullin, president and CEO of the Urban Development Institute, said, “On the additional new housing taxes proposed by the City of Vancouver, these may appeal to some voters but will not address affordability, given the housing supply shortage has yet to be tackled in any meaningful way beyond reports and strategies.”
She added, “We need clarity on their call for review of applicable federal and provincial income taxes and capital gains taxes. If they’re going after those who didn’t pay their taxes on real estate sales on non-principal residences or investment properties, we support that approach. But if they’re proposing homeowners start paying capital gains taxes on their principal residences, that impacts people’s equity, children’s inheritances and retirement plans for those who lack public sector pensions; and we would expect homeowners to be fully engaged on this proposed overhaul of our tax system.”
The news follows last week’s release of the Housing Vancouver strategy, which sets out ambitious goals to build 72,000 new homes over the next 10 years, many of those rentals and many family-sized, with widespread densification of single-family neighbourhoods.